Handbook on the Economics of Crime
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Handbook on the Economics of Crime

Edited by Bruce L. Benson and Paul R. Zimmerman

While few economists analyzed criminal behaviour and the criminal justice process before Gary Becker’s seminal 1968 paper, an enormous body of economic research on crime has since been produced. This insightful and comprehensive Handbook reviews and extends much of this important resulting research.
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Chapter 14: Labor Markets and Crime: New Evidence on an Old Puzzle

David B. Mustard


David B. Mustard INTRODUCTION For nearly 50 years academics have been studying the extent to which labor markets affect crime. Fleisher (1963) used data from the Uniform Crime Reports between 1932 and 1961 to examine how the unemployment rates of young males in Boston, Cincinnati and Chicago affected juvenile delinquency. He estimated that elasticities of unemployment rates of males between ages 16 and 24 to crime were about 0.10 to 0.25. Fleisher (1966) explored census tract data from the Chicago area between 1958 and 1961 and data from 101 cities with population in excess of 25 000. He concluded that higher unemployment and lower median income of those in the poorest quartile both increased the arrests of young men. Becker (1968) developed a formal theory of crime that modeled the social cost of crime, the cost of apprehension and conviction, the supply of offenses, and punishments. This approach links the number of offenses committed by an individual (Oj) to his probability of conviction ( pj), his punishment or fine if convicted fj, and other variables (uj) as follows: Oj 5 Oj ( pj, fj, uj) While this model provided the groundwork for further theoretical and empirical advances in the economics of crime, it primarily focused on how the supply of offenses is affected by changes in the probability of being caught and the fine incurred if caught, and said little directly about the link between legal labor market opportunities and crime, which occurs through uj, the portmanteau variable. Ehrlich (1973) developed a...

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